Many investors hoped Bitcoin’s price would rally as pressure increases on emerging market currencies like the Turkish Lira. Instead, Bitcoin is following the downward trend of these currencies.
Economist Panos Mourdoukoutas, writing for Forbes, describes the prospect of Bitcoin replacing national currencies as a myth.
Bitcoin Following Trend Set by Turkey and Argentina
Mourdoukoutas believes that Bitcoin (BTC) 00 is following the crash of emerging market currencies like those in countries like Turkey and Argentina. These countries have massive US dollar debts, and their home investors are seeking new opportunities to protect their wealth. Instead of looking to Bitcoin and other cryptocurrencies as a new investment vehicle as some might expect, these investors are looking elsewhere. This includes traditional investment opportunity of gold.
Strangely enough, Bitcoin’s performance is currently mirroring the historic performance of gold as an asset.
Unlikely to Change
Mourdoukoutas cited Clement Thibault, Senior Analyst at Investing.com, who expects that people with the “technical ability to buy into Bitcoin would have done so by now.” Thibault doesn’t expect emerging markets to positively impact Bitcoin’s price in the near future stating:
I’m not convinced emerging countries are capable of moving the needle enough, especially after significant devaluations in their local currencies.
A Damaging Drop for Bitcoin
Bitcoin’s price fell more than 15% in 24 hours in recent days, creating what Rob Sluymer of Fundstrat Global Advisors describes as a “damaging drop.” The cryptocurrency slid below its 100-day moving average — an indicator of momentum that could point to further trouble.
Many investors hoped Bitcoin’s price would rally as pressure increases on emerging market currencies like the Turkish Lira.
CME Trader Brian Stutland is predicting a September rise for Bitcoin and a return to $7250, despite recent performance.
A Reserve Currency?
Placeholder VC partner Chris Burniske said in a new analysis this week that Bitcoin is actually “functioning well as a reserve currency.” Burniske finds that Bitcoin is performing as expected from a reserve asset of choice.
Although the theories and expectations regarding Bitcoin’s long-term durability vary greatly, short-term investors are once again holding their breaths and peering at the charts.
What are your thoughts on Bitcoin’s current performance? What do you think is the cause, and what next for Bitcoin? Let us know in the comments below.
Images courtesy of Shutterstock.